Deere Outlook - Technical Weakness Looms Despite Mixed Analysts and Inflows

Deere Outlook - Technical Weakness Looms Despite Mixed Analysts and Inflows

Market Snapshot: Deere (DE.N) faces a challenging technical outlook with a weak trend and bearish signals dominating—sellers outpacing buyers, and investors are advised to avoid the stock for now.

News Highlights

Recent news paints a mixed picture for the agricultural sector. The Farm Machinery Industry Eyes Modest Recovery in Brazil shows early signs of stabilization, with revenue up 12% from November 2024 to February 2025—potentially a positive ripple for Deere’s international business.

Meanwhile, U.S. Policy Changes on Vaccines and Trump's Tariff Announcements could have broader macroeconomic effects. Though not directly tied to Deere, shifts in global trade policy and health regulations may affect farm demand and supply chains over time.

Analyst Views & Fundamentals

Analysts remain divided. The simple average rating is 4.00, while the performance-weighted rating is 2.84. This suggests a generally neutral-to-bearish outlook, with some analysts showing strong historical accuracy, such as Tami Zakaria from JP Morgan (83.3% win rate), while others, like Michael Shlisky from DA Davidson, have a poor record (0.0% win rate).

The analysts' ratings are not consistent, with recent ratings split between "Strong Buy," "Buy," and "Neutral." This divergence highlights uncertainty about Deere’s near-term direction.

Despite this, fundamental factors show a mixed bag. Here are key values and their associated internal diagnostic scores (0-10):

• Price-to-Earnings (PE): 90.71 – Score: 3.0 (High PE suggests expensive valuations)
• EV/EBIT: 73.01 – Score: 3.0 (High EV/EBIT suggests high valuation relative to earnings)
• Basic EPS YoY growth: -33.45% – Score: 3.0 (Earnings contraction)
• Profit-MV: -0.15% – Score: 2.0 (Negative profitability trend)
• Interest coverage ratio: 3.00% – Score: 3.0 (Sufficient but not robust)

While some fundamentals, like low debt to working capital (0.94%), remain strong, the earnings outlook is bleak, contributing to the overall moderate fundamental score of 5.16.

Money-Flow Trends

Big money is moving out of Deere. The fund-flow score is 7.73 (good), but this contrasts with the negative overall trend in institutional and large-cap flows. Retail investors are the only net buyers (positive Small-trend), while institutional and large-money flows are heading for the exits. Specifically:

• Small flows: Positive trend, 50.35% inflow
• Medium flows: Negative trend, 49.68% inflow
• Large flows: Negative trend, 48.99% inflow
• Extra-large flows: Negative trend, 48.61% inflow

This divergence between retail and big money suggests that while individual investors remain bullish, institutional investors are wary, likely due to weak fundamentals and technical signals.

Key Technical Signals

Technically, Deere is struggling. The internal diagnostic score is 2.95, and the overall trend is weak, with three bearish indicators overpowering one bullish one. Here’s a breakdown of recent signals and their scores:

• WR Oversold: Score 7.65 – A bullish signal suggesting the stock may be oversold.
• Bearish Engulfing: Score 2.15 – A bearish reversal pattern.
• Dividend Announcement Date: Score 1.00 – Historically, negative returns follow this event.
• Bullish Engulfing: Score 1.00 – Labeled as bearish in this context, likely due to weak follow-through.

Recent patterns include a WR Oversold signal on 2025-09-03 and again on 2025-08-29, indicating potential buying interest. However, bearish signals like the Bearish Engulfing on 2025-08-25 and a Dividend Announcement on 2025-08-27 have likely pushed the stock lower. The key insight is clear: “Technical indicators show that the market is in a weak state, and we need to pay attention to the risk of decline.”

Conclusion

Deere faces a tough outlook for now. While retail investors are buying, institutional money is pulling back, and technical indicators are bearish. With analyst ratings mixed, fundamentals showing earnings pressure, and internal diagnostic scores flagging weakness, it may be wise to consider waiting for a clearer trend or a pullback before taking a position. Keep an eye on upcoming earnings for more clarity on whether the company can regain momentum.